REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

									CASE NO: 17330/2012

In the matter between:

and

JUDGMENT DELIVERED ON 30 NOVEMBER 2012

DAVIS AJ

Introduction
[1] In this application for summary judgment the plaintiff claims payment from the first and second defendants, jointly and severally, of an amount of R905 823.91 in respect of moneys loaned and advanced to defendants against the security of three mortgage bonds registered over Erf 1166 Swellendam ("the property”). Plaintiff also seeks an order declaring the property executable. The defendants, who are married to each other out of community of property, reside at the property.

The Constitutional Court has considered the appfication for leave to appeal and has concluded that the application should be dismissed as there are no prospects of success. ’

The agency defence
[6] The defendants allege in paragraphs 13 of their opposing affidavit that the agreements relied on by the plaintiff (i.e. the ioan and mortgage bonds) are invalid

13.3. The monies advanced by the Plaintiff to the First Defendant and myself were in fact monies that it loaned from the Reserve Bank in accordance with the Reserve Bank Act (Act 90 of 1989);

13.5. Accordingly, the Plaintiff advanced the Reserve Banks (sic) money to the First Defendant and ourselves (sic). Thus:

13.5.2. The Plaintiff failed to disclose these facts to the First Defendant and myself at the time of contracting which is in itself a breach of the Banks Act (Act 94 of 1990) as well as various common law principles.

[8] The defendants provide no basis or support whatsoever for the bald factual allegations made in paragraphs 13.1 to 13.5 of their affidavit about complex:;matters^ of: banking which one would not expect to fall within the ambit of the personal , knowledge of the average consumer. Without a basis being laid for this specialist knowledge, I cannot but entertain serious doubts whether the defendants have the . professed personal knowledge of these facts, and therefore whether the. defence, is put up in -good faith. It seems to me that the defendants have simply latched onto the defences put up in the Teliinger casei without any personal knowledge of or-sound foundation for: the material facts said to underlie the defence, which appears to be based entirely: on speculation. This seems to me, at be$t, to be opportunism on the part of the defendants.

[9] Moreover, the allegation that it was the Reserve Bank, and not the plaintiff; who loaned moneys to the defendants, flies in the face of the clear wording of the written loan agreement and mortgage bonds attached, to the summons. These documents - the contents whereof have not been denied by the defendants - make it quite clear that the lender was the plaintiff.

[10] I further consider that the agency defence rests on several flawed premises :and is not good in law, for reasons which I deal with below.

'the business of a bank’ means -
(a) the acceptance of deposits from the general public

(i) 

(iii) for the financing, wholly or to any material extent, by any person of any other business activity conducted by such person in his or Her own name or through the medium of : a trust or a nominee; (my underlining)

[12] Thus the suggestion that the plaintiff must have utilised monies obtained from the. Reserve Bank to make the loan to defendants, because it was precluding from using its clients’ deposit to make loans, is unfounded. The definition of the business of a bank; makes it clear that the plaintiff was perfectly entitled: (subject to any other applicable : statutory requirements) to utilise monies received from deposits to grant loans'

[15] Quite simply, the granting of loans on the security of mortgages over immovable property forms part of the legitimate business of banks which are duly registered credit providers in terms of the NCA. This conduct is not part of the business of the Reserve Bank, and, indeed, the Reserve Bank is expressly precluded from engaging therein, t consider it far-fetched in the extreme to suggest that the Reserve Bank would flout this prohibition, and there is not one iota of evidence on the papers to suggest that it has done so.

The securitisation defence
[16] In paragraphs 14 and 15 of their affidavit the defendants allege as follows:

15. The abovementioned practice is likewise subject to adjudication in the Constitutional Court. If it transpires that this practice occurs, which I verily believe does, it results in the following dichotomy for the Plaintiff:
15.1. The Plaintiff, upon selling the bond and/or debt, loses the right to enforce the claim which it sold;

[17] I have already adverted to the fact that the Constitutional Court evidently rejected the arguments put up in the Tellinger case. As in the case of the agency defence, it seems to me that these allegations concern facts which do not fall within'the personal knowledge of the defendants, and amount to nothing but speculation on their part. It is well known that securitization is a highly sophisticated commercial transaction resting on complex agreements, the preparation of which requires specialist legal and financial knowledge. It is highly unlikely, in my view, that such a transaction would be structured in a manner which permanently divests the mortgagee bank of its right to institute legal proceedings against the defaulting mortgagor. Be that as it may, the important point, for present purposes, is that there is simply no evidence on the papers to suggest that the plaintiffs claim ; under the loan agreement and mortgage: bonds has been ceded to a third party.

[19] Mr Zazeraj argued that the defendants should not be penalised for mounting a defence based on facts which fall within the exclusive knowledge of the plaintiff and of which they can therefore have no personal knowledge. He argued that ; they should be allowed to defend the action and to request discovery in order to ascertain whether or not the claims reiied upon by the plaintiff have in fact been subject to securitization, i do not. agree. Summary judgment, where a plaintiff is otherwise entitled thereto, ought not to be refused merely because the defendant wishes to embark upon a fishing expedition in the hope of coming up with a defence.

[20] To my mind this particular argument, which involves an implicit concession that the defendants do not have knowledge of the material facts said to underlie the defence, merely serves to underscore the fact that the securitization defence was knowingly put without any factual basis therefore, and that the defence cannot therefore be said to be advanced in good faith. I might add, in this regard, that it appears from the plaintiffs particulars of claim that the defendants underwent debt review proceedings in terms of the NCA. One would have expected them to raise these concerns and objections at an earlier stage, if they were genuine.

Other defences

(i) the plaintiff’s affidavit in support of its summary judgment application was technically defective;
(ii) the plaintiff had failed to allege whether or not the parties were married in or out of community of property;
(iii) the loan agreement was not annexed to the.simple summons.

[23] These defences are, to my mind, patently devoid of any merit. The technically defective affidavit filed in case number 9834/12 is irrelevant in this case where there is no. such defect. The allegation pertaining to the parties’ matrimonial property regime is irrelevant given that they were both party to the loan and mortgage agreements, (in any event, it appears clearly from the mortgage bond annexed to the summons, marked “C”, that the defendants are married out of community of property.) Finally, the loan agreement was, in fact, annexed to the summons in this case.

[25] The defendants have failed to pay the instalments owing on the mortgage bond for a period in excess of eighteen months. The arrears owing are substantial, being in excess of R167 000.00, and the balance outstanding on the bond exceeds R900 000.00. There is no suggestion of any abuse on the part of the plaintiff bank in seeking to execute against the property. Nor would the results be disproportionate in my view. In the circumstances the plaintiff must be allowed to realise its security in terms of the mortgage bond,

Requirements in terms of the National Credit Act
[26] I am satisfied that the plaintiff has duly complied with all obligations resting upon it in terms of the NCA for enforcement of its claim:

Conclusion

[28] Summary judgment is accordingly granted as follows:

(ii) Interest on the said amount of R905 823.91 at the rate of 13.10% per annum, calculated on daily balances and capitalised monthly, from 30 March 2012 until to date of payment;
(iii) Costs of suit on the scale as between attorney and client, as taxed or agreed.

Erf 1166 Swellendam, situate in the SWELLENDAM Municipality and Division, Province Western Cape, In extent 582 square metres and held by Deed of Transfer T 68513/2005,

D M DAVIS 
Acting Judge of the High Court